February 20 2007
Parties are generally free to avoid or limit potential obligations to reimburse damages resulting from breach of contract or tort by agreeing on an exemption clause. This update discusses the following aspects:
Exemption clauses are generally tested against the limiting effect of reasonableness and fairness.(1) The following ground rules must be respected when conducting such a test:
It is generally unacceptable for a party to invoke an exemption clause in case of wilful intent or conscious recklessness on the part of the party or of the company's management.(5) According to Saladin v HBU,(6) whether it is unacceptable to invoke any other exemption clause will depend on the weighing of many circumstances, including:
In ICT contracts between professional parties, the gravity of the fault is arguably the most important circumstance to consider. Therefore, the following circumstances are significant:
Arguably, the other Saladin v HBU circumstances should not - or should only to a small extent - influence the assessment of exemption clauses in ICT contracts.
Parties are free to allocate risks. Contracting represents an allocation of risks. The conclusion of exemption clauses also represents an allocation of risks. Judges should respect this freedom as much as possible.(7)
(7) For further details please see https://openaccess.leidenuniv.nl/handle/1887/4411.
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